Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

Barron's got its hands on a research note in which BMO Capital's Keith Bachman cut his notebook PC shipment estimate for the second quarter. Specifically, Bachman said reports from original design manufacturers show notebook shipments came in at just 10.2 million units in May, a 1 million unit miss from his previous expectation for shipment of 11.2 million units.

As a result, Bachman cut his forecast for June from an anticipated 10% growth over May down to 5-6% growth. The midpoint of that estimate range is slightly below the average May to June month-over-month growth of 6%.

For Intel (NASDAQ: INTC), which derives much of its revenue and operating profit from PC sales, this is hardly good news.

Another troubling data pointSeparately, DigiTimes said in a pre-publication blurb that first-tier PC vendors are seeing "serious inventory issues in Europe." These issues, DigiTimes reported, might lead to price cuts in order to move this older generation inventory.

To make matters worse, some channel retailers are responding to this news by "boycotting the vendors and avoiding having inventory dumped on them," according to DigiTimes. That also doesn't sound like great news for Intel, which is counting on PC vendors to "lean out" their inventories, to borrow Intel CFO Stacy Smith's wording, before rebuilding their own inventories -- which means buying more Intel processors -- during the second half of the year.

All eyes on Windows 10 and SkylakeBachman, according to Barron's, "reiterated his view that shipments of PCs will be helped with the arrival of Microsoft's (NASDAQ: MSFT) Windows 10." The success of Windows 10, as well as Intel's next-generation Skylake platform, will decide whether the chipmaker meets its guidance or if it must revise it down further.

As a quick refresher, Intel's Smith said there was "fairly significant inventory burn in [the first quarter]" within the PC supply chain. Smith said Intel's guidance is baking in "continued inventory burn in the quarter." He said, though, that Intel expects PC vendors to "rebuild inventory levels in the third quarter."

According to a note from Oppenheimer analyst Rick Schafer (via Barron's), "nearly all" of the PC vendors that his team met with "remain confident in a [second half] return to growth and more "normal" seasonality."

The analyst said "visibility remains limited," but that the PC vendors he met with "cited lean channel inventory" and "early signs of a July order uptick." He also said "hope remains" that Intel's upcoming Skylake processor could "help spark some seasonal growth."

We'll have to see just how this all plays out for Intel and the PC industry as a whole.

What about the Altera deal?The sell-off in Intel stock began on June 1 -- the day Intel announced that it would acquire Altera (NASDAQ: ALTR). When reports first surfaced that the chipmaker was interested in the buyout, Intel stock actually performed quite well -- perhaps signaling investor approval of the deal. Now, following the deal, the shares have been steadily selling off.

Perhaps at least part of the sell-off is due to the well-known "buy the rumor, sell the news" phenomenon?

Some additional thoughtsAt the end of the day, I think Intel's share price, at least over the next few quarters, will depend on how the PC market fares. If demand improves as a result of Windows 10 and/or Skylake, investors might have cause to breathe a sigh of relief.

On the other hand, if demand remains tepid even once Windows 10 and Skylake hit the shelves, then that could lead to another reduced guidance for 2015 sales and might portend bad things for the future of the PC market.

Intel is still heavily exposed to PCs; if investors believe the market will continue to decline, then they're going to have less confidence in the company's ability to grow revenue and profits over the long term, potentially negatively impacting Intel's stock price.

Author

Ashraf Eassa is a Senior Technology Specialist with The Motley Fool. He's an experienced and passionate technology stock analyst and investor with focus on semiconductor companies. He holds a B.S. in Computer Science as well as in Mathematics from the University of Vermont. You can write to him at aeassa@gmail.com -- he doesn't bite!